Types of properties: Insurance needs by house type

If you own or rent out property, you’ll need insurance to protect you in case the worst happens. The actual coverage you need will depend on what type of property you own.

Pat Howard 1600

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Pat Howard

Pat Howard

Property and Casualty Insurance Expert

Pat Howard is a senior editor at Policygenius specializing in property and casualty insurance. His work has been featured on Property Casualty 360, Fatherly, MarketWatch, and more.

Published August 5, 2021|6 min read

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Whether you own a house that you live in full time or you have an investment property that you plan on flipping or renting out, you should make sure you’re financially covered with the right type of property insurance

While the extent of coverage varies by policy type, on a basic level, property insurance reimburses you if your property is damaged, burglarized, or you’re held liable for an accident. Your insurance covers property damage and loss (in case of a kitchen fire or break-in), and your liability if a guest is injured on your property. 

What type of property insurance do I need?

Your property insurance needs depend on the type of property you own. If you own a single-family house, you’ll need homeowners insurance; if you own a condo or co-op, you’ll need condo insurance; if your house is on wheels, chances are you’ll need mobile and manufactured home insurance (or even RV insurance). 

Property insurance is also tailored to how the residence is used, so if you own a seasonal home, you’ll need a home insurance policy that is written specifically for vacation properties. If you rent out your property through short-term rental websites, you might consider something like short-term rental insurance instead of a home or landlord insurance policy.

1. Single-family homes

If you own a single-family home or plan on purchasing one, be sure to protect your property and assets with homeowners insurance. Home insurance covers the structure of your residence as well as your personal belongings (TVs, laptops, furniture) in the event of covered property damage or theft. If a houseguest is injured and you’re found liable for the accident, your policy’s liability coverage can help cover the cost of medical or legal bills. 

Homeowners insurance does not cover damage caused by flooding, earthquakes, and it has limited coverage for damage or theft of business property. Home business liability isn’t covered at all. Most insurance companies offer separate flood insurance and additional coverage for home businesses. Earthquake insurance is offered by some major insurance companies, but is usually sold by specialty insurers or the California Earthquake Authority. 

2. Condos or co-ops

Condos and co-ops are individually owned units in a multifamily building. Rather than having to deal with a property management company, unit owners have their own condo association (COA) that collects dues from residents to pay for building upkeep, maintenance, and the COA’s insurance. Better known as the “master policy”, the COA’s insurance covers damage or loss to the building and common areas, but coverage rarely extends to the structure of your condo unit. Your COA’s policy also won’t cover your personal items inside the unit. 

If you’re a condo owner or plan on becoming one, you’ll need condo insurance to cover the interior of your condo and personal belongings inside. Condo insurance is designed for condo or co-op owners only. If you rent a condo unit and need coverage for your belongings, you’ll need renters insurance.

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3. Mobile homes

If you own a mobile home, including a trailer-style home, a double-wide, or a modular home, you’ll need what is referred to as an HO-7, or a mobile homeowners policy. Mobile or manufactured home insurance is similar to regular homeowners insurance — the difference is the latter is written specifically for homes constructed on site. 

However, if your home is an RV or van that you plan on moving around frequently, you’ll likely need RV insurance — not mobile or manufactured home insurance.

4. Rental properties

If you own a house, condo, or multifamily building that you rent out to tenants on a long-term basis, or you’re planning on renting out your residence for a year or two, you’ll need rental property insurance (aka landlord insurance). Landlord insurance covers the structure of the rental property as well as your personal items (like maintenance equipment) on site, but it doesn’t cover the tenant’s personal belongings.  

Landlord insurance can also reimburse you for loss of rental income if your property is damaged by a covered peril and your tenants have to move somewhere else. Rental property insurance is intended for all types of properties, including single-family homes, townhouses, and apartment buildings.

5. Short-term rental properties 

If you rent out property on a short-term basis through services like Airbnb or VRBO, you probably don’t need landlord insurance, but you may need something more specialized than standard homeowners insurance. That’s because insurance providers view short-term rental properties as businesses, and home insurance is fairly restricted in this area. In fact,

If you file a claim for, say, vandalism or theft that occurred while a guest was staying at the residence, your claim may be denied. If you rent our property on a short-term basis, consider adding short-term rental coverage to your home insurance, or look into a short-term rental insurance policy through a more specialized insurer.

6. Second homes

If you own a house or condo that you use as a seasonal residence or a vacation home, like a lakeside cabin or a condo by the beach, you’ll need second home insurance. Second home insurance is virtually the same thing as homeowners insurance, the only difference is what happens behind the scenes and how your insurer calculates the risk of insuring your property. 

Vacation homes are generally viewed as more risky to insure, as incidences of theft and sustained damage from fire or other hazards are more common when the home is empty. For that reason, these policies typically cost more than insurance for your primary residence. When purchasing coverage for a seasonal home, be sure to let your insurer know that it’s a secondary (not primary) residence, otherwise you may not be covered in the event of a claim.

7. Historic homes

If you own a historic home and it’s in decent physical condition, you may have no issues getting home insurance. However, there are a couple caveats to keep in mind: Your premiums will likely be significantly higher than that of a modern home; and the insurer may not agree to cover the home at its full replacement value, or the amount it would take to rebuild it with the same materials and quality. You may find that the insurance company will only insure the home at its actual cash value or functional replacement value (reimburses you for the value of modern, less expensive building materials). 

If you’re intent on insuring the house so that it’s repaired or replaced with the same unique features and materials with which it was originally built, you may need a more specialized historic home insurance policy. Some insurers, like Zurich and Chubb, offer specialized coverage for historic homes if they’re recognized by the National Register of Historic Places. Historic home insurance can also be found through the National Trust Insurance Services, an organization that connects owners of older properties with specialized insurers.  

8. Tiny homes

If you own a tiny house, your insurance needs will depend on how it was built and how you use the home. If your tiny home is on wheels and you intend to move around on a frequent basis, you should consider basic RV insurance. Just keep in mind that the house must meet standard form the Recreational Vehicle Industry Association (RVIA). 

If your tiny house is mostly stationary and built by a National Organization of Alternative Housing (NOAH) builder, your other option is an HO-7 mobile or manufactured home insurance policy. If your house isn’t RVIA or NOAH-certified, there are several tiny home insurance companies that will insure your residence.

Frequently asked questions

What are the four types of property in real estate?

The four main types of real estate are residential, commercial, industrial, and land. The most common type of residential real estate are single-family homes, but it also includes condo buildings, co-ops, townhouses, duplexes, and vacation properties. Commercial real estate includes retail businesses, restaurants, malls, apartment buildings, and hotels. Industrial real estate refers to manufacturing plants and factories that produce and distribute goods. Land real estate includes vacant lots, farms, and ranches.

Do you need special insurance if you run a business from home?

While homeowners insurance will cover damage or loss to home-based business property, there’s a limit to how much insurers will pay out on a claim. Coverage for property that you used for business, including laptops, desks, chairs, art supplies, photography equipment, etc is typically capped at $2,500 in a standard policy. Additionally, home insurance won’t cover business liability, meaning if your client or employee is injured at your house while on the job, your insurance won’t pay out for legal or medical expenses. For additional protection for your home-based business property and liability, consider increasing the business property coverage limits in your policy, or purchase a standalone in-home business insurance policy.

Do I need flood insurance?

Homeowners insurance doesn’t cover water damage caused by flooding, so if you live in a flood zone or low-lying area near a body of water, you may want to consider a separate flood insurance policy for your home. Federal government (NFIP) flood insurance is provided by most major insurance companies. Some insurers also have their own private flood insurance that may have higher coverage limits and more comprehensive protection than the NFIP policy.

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